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Tuesday, May 01, 2007

Workers, poverty and Marx

May 1st is of little significance in the United States. Other nations, however, still have a holiday rooted in old Marxist nonsense. It is sometimes called International Workers’ Day. Those with a particularly strong faith in the Church of Marxism toss the word “Solidarity” into the mix along the way as well. Basically it is a day for the most dogmatic members of the Marxist cult to strut around, sound pompous and show their ignorance about basic economics.

In essence they use the day to propagandize in defense of socialist theory and promote the idea that it will improve the lot of the workers. Marxists argued that socialism was required because under the “whip” of capitalism the economic plight of workers would continually decline. Workers would be forced into abject poverty.

One of the prominent socialist groups pushing that idea was the Fabian Society. A few years back I saw a BBC show called Big Ideas. And in it they interviewed Michael Jacobs, general secretary of the Fabian Society. I thought this would be interesting to watch since he was supposed to be talking about the plight of workers under capitalism.

Since his socialist group is more than 100 years old I figured it would be interesting to see how he dealt with the issue of the deteriorating condition of workers since workers in fact are vastly more prosperous today than at any time in history. The Marxist theory was about as wrong as one could be on that issue.

Jacobs, of course, excoriated capitalism quite loudly. But his complaint was the polar opposite his predecessors in the Fabians. His complaint was that under capitalism people had so much material wealth they lost sight of the “important” things in life. They failed to stop the roses (red no doubt) along the way. The BBC described the exchange this way, Jacobs “argues that although Britain has become more prosperous, we have sacrificed our quality of life. We are working too hard, buying too many useless luxuries, and destroying the environment.” Of course, he argues that the way to prevent this sort of materialistic prosperity is socialism.

What has to be embarrassing to the Marxist is that the more capitalist a country the higher the living standards of workers. We have had one of the most extensive, longest running, social experiments in the world when Marxists took violent control of multiple nations. They had the power to mould those nations anyway they saw fit -- and did. The result was poverty not prosperity.

It didn’t matter where you looked you saw the same results. East German couldn’t hold a candle to West Germany. North Korea can’t even come close to the prosperity in South Korea. The long term results of socialism is dismal compared to the “anarchy” of the market.

Consider the recent history of the Chinese people. Under Maoist dogma the economy was centrally planned. Collectivism was imposed and private property abolished, profit seeking was a criminal offense. And millions of people starved to death. Jasper Becker, in Hungry Ghosts, outlines exactly how the Maoist regime’s inability to understand the economy condemned millions of peasants to death by starvation.

But a few years back Chinese communists did something odd. They redefined their socialist ideology to include massive free market elements. And the more they freed the market the more prosperous the Chinese people have become. Each wave of market liberalisation has propelled the economic boom in China even further. For thirty years now that nation has witnessed massive growth rates. In that time hundreds of millions of people have been lifted out of poverty -- not by welfare and redistribution of wealth but by the prosperity-creating nature of free markets.

Now much is made of the rural poor in China. Rural farmers have not done as well. And they haven’t. But it was not the reforms that harmed them but the lack of reforms for them. One very real problem is that the Chinese government has not yet created secure property rights for farmers. Land has often been confiscated from the farmers to build factories or housing and the farmers have seen little or no compensation from that. Their only means of earning a living is taken from them by state action not by market forces.

In a market the factory that wants this land would have to value the land higher than the value the farmer places on it in order to secure it. He would have to pay the farmer for the property. This would enable the farmer to relocate his enterprise elsewhere or to use his profits to start a business himself.

This illustrates the driving force of poverty in the Third World. The fact is that hundreds of millions of people, if not over a billion, have insecure property rights. Throughout the world people live in housing they don’t own and which may be taken from them any time the government wishes. Without secure property rights they don’t invest in expanding the value of the property and can’t use it as collateral. They have assets but they technically don’t own them and therefore are hampered in how they can use them.

The best method for alleviating poverty is through true markets where the State can’t allocate privileges to anyone and where property rights are secure.